Evidence of meeting #57 for Agriculture and Agri-Food in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was research.
A recording is available from Parliament.
Vice-President, Corporate Affairs, Canola Council of Canada
Of farm cash receipts across the country.
Conservative
LaVar Payne Conservative Medicine Hat, AB
Farm cash receipts. Okay. I just needed to get that clarified.
I want to follow up on some of the areas in terms of research. You talked about research clusters. I'm assuming that you want to continue on in that vein.
You also talked about opening markets and competitiveness. Maybe you could expand on that for us as to how you would see that happening. You also talked about blackleg and how we get around those kinds of issues.
Vice-President, Corporate Affairs, Canola Council of Canada
In terms of research, it's important for us to continue to innovate. We have a strategic plan in the industry not only to increase production, but to increase the value of the product, the energy value of the meal and the oil content. If you can improve the oil content of the seed, for every percentage you increase, you're creating more oil per acre of land. We want to continue to do that, and to do that requires a very focused investment in research.
We think we're getting that through the cluster approach that the Growing Forward framework has. We hope to be able to see that and improve on that in Growing Forward 2.
In terms of markets, it's a matter of negotiating trade arrangements that not only reduce tariffs, but also create more predictability. One area we're very interested in is the trans-Pacific partnership, which is a group of 11 countries now. On the tariff side there is probably not as much to gain there, although there is some, but we have duty-free access to the United States and Mexico currently.
What's interesting is that there's an opportunity, I think, to look at issues like sanitary and phytosanitary, SPS, issues, and when there's a problem with those things, how you respond. There's an opportunity to look at this whole issue of asynchronous approvals of GM traits in the international market. This would add much more predictability to the prosecution of the grain trade. In those kinds of trade arrangements, I think it's an opportunity to sit down, roll up the sleeves, and look at those issues of trade barriers, SPS issues, and science-based regulation to improve the trade environment.
Vice-President, Corporate Affairs, Canola Council of Canada
Did I fully answer your question? There might have been a third point that—
Conservative
LaVar Payne Conservative Medicine Hat, AB
It was just on open markets and competitiveness. I did mention blackleg, but I think that you talked about that, and of course GM.
Mr. Newkirk, in your opening comments you talked about technical marketing and research. What types of investments do you see are required in research, and how do we get those products that you were talking about to commercialization? Do you have some examples of past successes? What would you see for the future?
Director, Research and Business Development, Canadian International Grains Institute
One of the key experiences I have had being at CIGI, and then doing some stuff before CIGI, is that we often assume the industry companies are able to take up a technology as soon as it has been developed in a university or at a research institute and an initial application has been shown. We see we have this neat and novel thing. We have made a cupful of it and assume that now it's ready to go commercial. Often, this is not the case, particularly in agriculture where although the return may not be as risky in the long-term, the companies are not able to absorb any risk because there are very low margins when you go into these markets.
I will give you an example. When I was working on my Ph.D, I developed a technology from canola to make protein concentrates for the aquaculture industry. We saw an opportunity where we could take canola meal and add a great deal of value to it by processing it differently. It could address a market need where fish meal is becoming in short supply.
We developed this technology. We got some patents. We went out to the industry and said, “You guys should do this. This makes a great deal of sense.” They said, “This is great, but have you ever made 2,000 tonnes per day? Have you ever sold 2,000 tonnes per day? What scale have you done this at?” I said, “We made a bucketful of it in the lab and we fed it to some fish.” At that point, the research funding available to do that kind of research is gone because we have already demonstrated it. What it really needed was a continual push into the market. That's what we did.
We had a decision to make. Do we just publish it as we normally would, or do we personally put our effort into it and do it? We started a company. Over the last 10 years, we perfected the process, which took a few years. Then it was a matter of continually being in front of the processing companies that could do this work. We said, “Here's an opportunity for you. We fed it to animals. Here are your customers. Keep in front of them.”
Canada has some infrastructure to do that kind of work. In the case of MCN, my company, we did sell it. Bunge has bought it. They are going to build very large plants. They are going to develop new products from canola. The engineering is under way for that right now. It could have easily stayed in the textbook and had very little economic impact. The investment needed is to keep doing the discovery work, but recognize that we need to take those discoveries to the next stage into the commercial pilot scale into helping, holding the hands of, and courting companies that can take this forward.
A past example of that would be pulses, where we worked with companies in China to produce vermicelli noodles from yellow peas. They were making vermicelli from mung beans. They wanted to grow their industry, but the mung beans available were limited. We thought that we could make it from yellow peas. We did some research and discovered that yes, we could make it. Working hand-in-hand with the government, trade commissioners, and Pulse Canada, we were able to stay in front of the customer and show them that yes, it can be done. Finally, they took it up. Now, it is an annual market turning about 350,000 to 400,000 tonnes of yellow peas into vermicelli noodles in China.
That's the type of effort it takes. It takes organizations. CIGI is one of those. We have the relationship with the customer. We are able to keep demonstrating and pushing. There are food technology centres. There are other organizations able to stay in front of the customer and take it to a scale and a place they can understand. There needs to be a greater partnership between the research and the commercialization activity.
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
I would like to thank you both for being here.
Rex, perhaps you could elaborate on what you just said. You said that you need greater communication between the two levels. How can the federal government help with that?
Director, Research and Business Development, Canadian International Grains Institute
They can ensure that infrastructure is available to do so.
In the case of MCN, my company, one thing that greatly benefited us is that we needed to take this up to larger scale. We had been doing some work in the lab at the POS pilot plant and needed to take it to a larger scale. A factory that we could rent happened to be available, one that had been purchased by the Saskatchewan government. We could produce large quantities of this material. If it hadn't been for that facility and the expertise there, we would never have been able to go forward and demonstrate enough production.
Where government can play a significant role is to ensure that the funding available to innovation is available at that point of demonstration, and be able to be used for that point. Oftentimes, we have observed that research funds and market development funds are two very different pots, and thou shalt not cross them. As a result, we take research to the research end, but then there's a gap. There needs to be a continuum where you can take that research, work with the universities and founders, and help them bring it into a commercial reality.
NDP
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
The Canadian International Grains Institute is non-profit. Do you receive most of your funding through Agriculture Canada?
Director, Research and Business Development, Canadian International Grains Institute
We receive about 50% of our funding through Agriculture Canada. The majority of our funding comes from market development work.
We've had the good fortune, because we're doing the market development work, to be able to take the research that is demonstrated and produced at universities and research institutes and keep demonstrating that to the customer. We've found that to be probably one of the more valuable pieces of market development. If you can keep helping that customer and bring the technology to them, then it adds value. That's why we're so passionate about seeing that gap filled and working with other organizations that can do the same.
NDP
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
Do you think the Canadian federal government is doing enough to support innovation and technology? On the world scene, we export a lot, but how are we doing compared to other countries?
Director, Research and Business Development, Canadian International Grains Institute
I think Canada makes some very good investments in basic research. I think Canada makes some investments and they've had some real successes in taking stuff to commercialization. But oftentimes it's been my experience that some other jurisdictions that have greater access to venture capital, to some of the other government funding, will take the research findings that we develop in Canada and put them into jurisdictions, for example, into Chicago, into the U.S., where they have greater access to some of that funding.
Funding is part of it, but part of it is to make sure the infrastructure is there. There are other jurisdictions around the world—in Holland, in the U.S.—that have the ability to do some of that.
I think Canada has made some investments there. We just need to make sure we keep making those investments and grow that investment and understand that piece.
NDP
Vice-President, Corporate Affairs, Canola Council of Canada
I would just add, as Rex said, the point about communications. In terms of research and innovation investment, there are things the private sector does really well and there are things the public sector can do really well.
In canola, there has been a large investment by the private sector in seed development and that's undoubtedly been very helpful to the producer.
Research in areas like crop rotations and ideal crop rotations over a period of time, where you want to do studies over 10 and 15 years, is something the private sector is not likely to do as much. That's where it's important to have public sector research and then have the two working together so that we're making the right decisions strategically about who does what well and how to use our dollars most effectively in this country.
NDP
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
Long-term projects, as you said, over 10 or 15 years, should be something the government should be playing an active role in.
Vice-President, Corporate Affairs, Canola Council of Canada
That's an example of where public sector research is more appropriate.
NDP
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
Okay.
The canola industry has been very strong. What kinds of weaknesses are there? We've heard a lot of the positive side, on where you've made a lot of gains. Can you elaborate on some problems or weaknesses and some ways you're going to improve?
Vice-President, Corporate Affairs, Canola Council of Canada
I would say that again we're looking to play a really key and leading role internationally in trade discussions and in discussions around science-based policies and regulations. It's not a weakness on our part, but it's something we need to improve in terms of the international environment to trade grain so that we have a more predictable environment and an environment that leads to greater investment, and so on.
I'll leave it at that. That's probably the area where we want to focus our attention.
Conservative
Blake Richards Conservative Wild Rose, AB
I certainly appreciate what I've heard from each of you so far. You're obviously both very knowledgeable and I appreciate your both being here today. I have a couple of questions for each of you, if the time permits. I'll start with you, Mr. Newkirk.
Obviously, the majority of the grains and oilseeds that we produce in Canada are ultimately destined for export. I'm wondering if you could give us a sense as to what that means as far as the fact that we do have such a heavy emphasis on our exports and on foreign markets. Obviously, as a government, we've done a lot of work to diversify the number of markets that are available to our farmers and to our producers for export, and that's been very important and very well received by the industry, for good reason.
I wonder if you could comment on what that heavy emphasis on foreign markets means and how it affects the supply chain.
Director, Research and Business Development, Canadian International Grains Institute
Sure.
Canada has always been an exporting nation. We have a great deal of resources and not too many people to feed, and as a result, we are able to produce a surplus of material, which is great for our economy as we are able to export that, to attract value from it. The canola industry has been a tremendous example of how a crop can be grown and further processed.
The fact that we have to export so much of our material has really changed the structure, or has created a direction for the grain supply chain. We know we need to be very efficient if we're going to compete with the world, when we grow most of our grain in the middle of the continent. If we're going to compete with somebody who is right next door to the customer and doesn't have to move the grain very far, we have to be very efficient.
That is really why we've seen so many changes. Although I grew up on a farm, I've only been directly in this part of the grain industry for nine years, and the changes I've seen over the last nine years are amazing. At the time it seemed overwhelming, but looking back, one recognizes that if we hadn't made those changes to create those efficiencies so that we could move the product in large volumes in a very consistent and transparent manner with the quality assurance, we would never be able to compete.
Of course, I would love to see further processing applied to our other crops as we are seeing on the canola side. Again, we have to be able to compete with large processors around the world that have heavy investment in infrastructure, for example, Turkey, where they have flour mills all over the place.
Certainly our industry has been designed around the ability to move and transport.
Of course, our domestic industry is still very important. We do have 30 million people to feed. We cannot ignore them. We need to keep an eye on them. It is important that the government recognize that we don't just export everything, that we do have a healthy domestic industry as well.
Conservative
Blake Richards Conservative Wild Rose, AB
You made some comments that lead very well into my next question. I see your title is director of research and business development. You've had a lot of opportunity in response to questioning to talk about the research side, but on the business development side of it, I want to get your sense of some of the changes we have made as a government with regard to opening up new markets, in terms of opening up the wheat and barley monopoly so farmers have the option to sell their wheat and barley where they choose.
I wonder if you could comment on those changes and how they will affect the opportunities for things like value-added processing and what that will mean for the industry.
Director, Research and Business Development, Canadian International Grains Institute
Sure. The transition has actually gone quite smoothly. The companies are efficient companies. They know what they're doing, and they have been able to pick up the marketing efforts, if you will. They were already moving the product anyway, so it's really just moving into the markets and working with customers directly. CIGI has continued to be there as the resource to provide backup support to them.
As far as further processing goes, there is some debate around what prevents it and why we do not see more production of flour or other products and then export those materials. Unfortunately, I don't know if I have an answer for you on that. I think time will tell. There was certainly some perception that perhaps the monopoly was one of the things that held back further processing.
We have seen some announcements of intentions by people to make investments in further processing in Canada, but if we are going to go into traditional markets and traditional processing such as flour production—normal flour, that is—it's hard for us to do so because there are already significant investments made in other countries.
Where Canada has a greater opportunity is if we can develop new products, things that are not produced elsewhere. If we can demonstrate the health benefits, the processing attributes, the baking attributes of those products, then we have a chance to produce those pulse flours, for example, and maybe some novel products from some of the grains. Then we can build up infrastructure around that rather than trying to compete with a great deal of.... As I said, Turkey is one example where there is very heavy emphasis by the government to mill flour and they have a huge number of flour mills. It's hard to compete with places like that, which have excess capacity.
